Tuesday, April 25, 2023

Are NDAs unenforceable when they protect more than trade secrets?

Are NDAs unenforceable when they protect more than trade secrets? The standard answer is no. NDAs can prevent disclosure of contractually-defined "confidential" information that is shared in the course of a confidential relationship, even if it is not technically a trade secret. NDAs can, in other words, go beyond trade secrecy.  

NDAs have also not traditionally been treated as contracts in restraint of trade, like noncompetes are. An NDA's purpose is, ostensibly, just to protect secrets. Similar to trade secret law, NDAs only prevent an employee from disclosing (and using outside authorization) specifically-defined information. They don't prohibit competition per se. NDAs are thus seen as comparatively "narrow restraints" which, all else being equal, should be preferred to noncompetes.

Or at least that is the common wisdom.  Although there is some support for this viewpoint in treatises and judicial dicta, our new article, Beyond Trade Secrecy: Confidentiality Agreements That Act Like Noncompetes, shows that a growing contingent of courts across jurisdictions are finding NDAs in employment agreements to be unenforceable when they reach too far beyond trade secrecy.  Even Google's NDA was recently found unenforceable by a California court, because it did not make sure employees could use or share skills they learned at Google with prospective employers. (That said, the Google opinion is quite extreme, even compared to others we reviewed. See pp. 8-11 of the opinion,  Doe v. Google, Inc., Case No. CGC-16-556034 (Cal. Super. Ct., Cty. of San Francisco, Jan. 13, 2022)).

The article is available on SSRN and is forthcoming in Yale Law Journal. It is co-authored by me and Chris Seaman.  This blog post is cross- posted on Patently-O  

Monday, April 24, 2023

Too Much of a Good Thing: Jake Linford on Copyright & Attention Scarcity

In his fascinating 2020 article in Cardozo Law Review, entitled Copyright and Attention Scarcity, Jake Linford provided a new justification for copyright law's barriers against derivative content—saving the overtaxed attention spans of copyrights' beleaguered audience. If readers and viewers got as much unauthorized derivative works as they wanted, Linford suggested, they would be unable to find the time and energy to read, watch, and sort through all of the derivatives available to them.  By giving original authors the right to control derivative works, copyright law protects the audience from content overload.  

I loved the article and really appreciated Linford's creative use of the literature on "attention scarcity." That said,  as a viewer and reader, I am not sure I like where the thesis leaves me. Speaking for myself, when I am tired and overloaded, the last thing I want is more originals. I want to return to my old favorites through a new lens; I want a sequel, a prequel, or a re-make. Whether these derivatives are authorized or un-authorized matters less to me than whether they are familiar and easy to get into without a lot of legwork. (I do want to know whether the content is made by or authorized by the original creator. But trademark law protects consumers from being misled as to source. Thanks to trademark law, I would know when the newest Star Wars is authorized by Disney and when it's not.)

I am about three years behind with this post.  My excuse, besides the pandemic, is that I felt it necessary to watch all seasons of Cobra Kai, along with the films in the original Karate Kid franchise, plus the entire library of Disney Plus, to fully research a response.